Italy is going to start including money raised from prostitution and narcotics in calculating its official GDP data from now on in order to comply with new EU rules, the country's statistics office said Thursday.

Istat, Italy's version of Statistics Canada, says the country will include estimates for all manner of previously hidden economic activity starting next year, including the sex trade, illegal narcotics, contraband cigarettes and bootleg alcohol, Istat said in a report published Thursday.

Italy is including the new activities because the EU wants to get better at monitoring the true state of the economy for member states, in part to make sure they are adhering to the appropriate target ratios for metrics like debt to GDP.

The Italian government has pledged to limit its budget deficit to 2.6 per cent of GDP this year, up only slightly from 2.5 in 2013 but a task which becomes easier to achieve if the number used to calculate GDP becomes unexpectedly higher.

Italy's central bank estimated that the black market was possibly worth as much as 10.9 per cent of the country's official economy in 2012.

Officially, the Italian government expects the Italian economy to expand by 1.3 per cent this year, a little above the European average. But Eurostat, the EU's stats body, says if all illegal activity is included the real growth rate for European economies could be closer to 2.4 per cent.

Eurostat said including black markets in Sweden and Finland would have the biggest impact on the economy, giving a boost of as much as four or five per cent. Austria, Britain and the Netherlands were next at three to four per cent.

Before the recession, Italy used to include calculations of the so-called "grey market" — legitimate businesses that simply don't pay tax — in its GDP figure. In 2008, the last time the figure was tallied, it was believed to make up between 16 and 17 per cent of the country's official economy.

With files from the Australian Broadcasting Corporation